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Gulf oil find won’t alter prices now
Matt Kempner, Cox News Service via Detroit News
Companies’discovery won’t be able to influence U.S. consumers’ costs for several years, experts say.
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…Here’s what some petroleum watchers have to say about the discovery’s impact on American consumers.
Q: How will it affect oil and gasoline prices in the near future?
A: “I don’t think in the near term it’s going to have that much bearing on what the price of gasoline is going to be over the next several years,” said Neil Gamson, an economist for the U.S. Energy Information Administration. “This stuff is so preliminary, you are not going to see any effect for several years before it gets developed.”
While oil watchers doubt the new find will significantly cut prices soon, they say expectations for the new domestic pool of oil may ease a little of the fear that has helped to keep oil prices high.
Questions remain about how big the find will turn out to be, said Adam Sieminski, the chief energy economist at Deutsche Bank. “There’s a lot of things that have to happen before the idea that this might be the size of Alaska can be proven. A lot of wells have to be drilled.”
Q: Will the Chevron find push oil prices down years from now when the field is producing?
A: “This find alone isn’t going to make any difference to prices,” Sieminski said. But once the oil comes on line and is combined with other expected finds in the Gulf and elsewhere in the world, the pool of new oil will affect markets, he said. “It’s a combination of this one and the next one and the next one.”
John Wood, director of the Energy Information Administration’s reserves and production division, said oil prices can vary widely depending on a range of issues that can restrict known supplies, including things like labor strikes in Nigeria or troubles in Iraq. So while additional domestic supply can add stability, disruptions overseas can still raise prices.
(9 Sept 2006)
Total chief says world will find oil target tough
Carl Mortished, The Times (UK)
The head of the French energy multinational is sceptical that the global oil industry can raise output from current levels of 85 million bpd to meet demand forecasts by the International Energy Agency of 120 million bpd by 2030.
Total is expecting a return to oil production growth after a setback in this year’s second quarter, when civil disturbance in Nigeria and unplanned maintenance shutdowns caused an 8.6 per cent fall in output.
The company is investing an extra $1 billion (£533 million) a year in repairing platforms, pipelines and infrastructure. M Desmarest said that the situation in Prudhoe Bay, where BP had to shut down production, was “emblematic” of wider problems in the industry.
He said: “It is clear a lot of fields were developed 20 to 30 years ago with a view that production would last for 15 years. However, the evolution of the oil price has justified efforts to catch the last drop [of oil].”
The problem has been exacerbated, he said, because the need to repair and replace old infrastructure is occurring when oil service companies are working flat out to develop new oilfields.
(8 Sept 2006)
Shell Says Cost, Lack of Gas Are Slowing Saudi Plans
Oliver Klaus, Bloomberg
Royal Dutch Shell Plc said a lack of natural gas and rising construction costs are slowing down the planned expansion of a chemicals plant in Saudi Arabia that it owns with Saudi Basic Industries Corp.
The plans call for expanding the Saudi Arabia Petrochemical Co., or Sadaf, petrochemicals complex in Jubail by adding a second plant for the production of ethylene, a gas derivative commonly used to make chemicals. The project is suffering from a shortage of natural gas in the country, said Robert Weener, the chairman of Shell Companies in Saudi Arabia, yesterday at a London conference.
Saudi Arabia, which holds a quarter of the world’s known oil reserves, excludes foreign companies from extracting them. Overseas companies like Shell are investing in the kingdom’s petrochemicals and refining industries in the hope they will be asked to develop the nation’s remaining oil resources.
Saudi Arabia’s gas consumption is rising as the country develops new industries that use gas to make chemicals and plastics. Cheap gas has made Saudi Arabia an attractive destination for international companies seeking to invest in petrochemicals. Gas production hasn’t kept up with demand, though.
“At this moment, Saudi Arabia is short of feedstock,” Weener said. “All that they have has already been spoken for.”
(8 Sept 2006)
Contributer Jeffrey Brown asks: “First, Saudi Arabia imported fuel oil. Are they going to be importing LNG next?”
Oil Projects Idle as Supply of Gear, Staff Runs Dry
Chris Kraul and Elizabeth Douglass, LA Times
A global shortage of drilling equipment has stalled production in Colombia. Delays of more than a year are common.
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BOGOTA, Colombia – Deep beneath the Caribbean Sea lies an oil field so promising that it could reverse this country’s six-year slide in petroleum production and ease its economic problems.
But no one can get to the crude.
A global shortage of oil-patch equipment has caused a two-year delay in plans by Petrobras to drill wells that would confirm early test results on the vast Tayrona field. The Brazilian company manages the site off Colombia’s Caribbean coast.
“The bottleneck is certainly delaying Colombia’s energy development,” said Petrobras’ Colombia chief, Dirceu Abrahao.
David Stangor, president of Occidental Petroleum Corp.’s operation in Colombia, added: “Prices for oil-field services and goods have steadily ratcheted up, as have delivery times.” The Westwood company also has ramped up oil exploration here.
The drilling rigs, seismic equipment, technical personnel and other necessities of oil exploration have become so scarce that Colombia and other oil producers are being forced to idle key oil projects until they can scrape together the machinery and staffing. Hold-ups of more than a year are common.
(9 Sept 2006)
